I don't understand what is going wrong. I have an older Trek mountain bike. The shifter is Shimano XT 8 speed, the rear derailleur is a Shimano Deore XT 8 SIS, and the crankset is an 8 speed Suntour Powerflo. It only uses moves along five gears. It ranges between the second to the largest down to the 3rd from the smallest. I have tried to loosen the cable entirely and see if the derailler moves all along the rear crankset. It only moves along those three gears and I also bottom out on my shifter. What do you think could be wrong? It is acting like a 5 speed system but as far as I can see it is an 8 speed system. Very strange.

Awesome! That helped with the derailleur. It is moving the entire range of gears now. But, I am still having problems with my shifter. It still only clicks/changes gears like it is a 5 speed shifter rather than an 8 which it clearly says on the shifter. It also seems that it is hard to press the lever that moves the gears to the larger part of the crank set. Could it be gunked up, rusted, or something. How could I fix that or should I get another shifter? This website is great by the way I think the tutorials are great!!

If it's a rapid-fire shifter (with thumb and forefinger levers), sometimes they get gunked up and you can loosen them by squirting some tri-flow or light oil into the body and working through the gears. If that doesn't work you may have to take it apart.